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MADISON COUNTY, IL-Proctor & Gamble have agreed to expand their lease at Gateway Commerce Center’s Westway III building to 1.2 million sf, effectively doubling the size of the building that they now fully occupy. The building is one of two commercial real estate properties built by a partnership of Trammell Crow and Kennedy Associates/MEPT/NewTower, on a 400-acre site that the venture hopes to expand up to 1,200 acres, with up to 14 million sf of distribution space.

Westway III is in the 10-year-old, 2,300-acre Gateway Commerce Center business park, which is spread across the city of Edwardsville and the Village of Pontoon Beach, across the border from St. Louis. The Trammell/Kennedy venture bought 400 acres in the park in 2005, with an option to purchase up to 800 more acres, says Trammell principal Jim Didion. “The first tenant to locate in the park was Dial Corp. in 1998, they came in with an 802,000-sf distribution center, and that broke down the psychological barriers to major companies to lease here, now we have tenants such as Unilever, Hershey and OHL.

The venture had planned on building three facilities, from Westway I to Westway III, Didion says. However, the plans changed to building Westway I as a spec building at 479,220 sf, and constructing Westway III to be 578,967 sf, expandable to double that size. “We knew we were going to expand it, and when Proctor & Gamble needed to consolidate space it leases around the park, it was easy for us to pull the trigger. We anticipate having the building ready for them by Dec. 1.”

Didion says when Westway III is expanded, it will be worth about $30 million. Average lease rates for the park are between $3.35 to $3.50, triple net, “and most of those have a tax abatement program that is 100% for the first seven years, then graduated out to 12 years,” he tells GlobeSt.com.

The area is perfect for a distribution park, he says. “Though St. Louis is seen as a second-tier distribution area, compared to cities such as Chicago and Los Angeles, we’ve moved up because of our central location. We’re right at Interstate-270 and Interstate-255, and you can pick up Interstate 70 and Interstate 55 real easy,” Didion says.

Proctor & Gamble is storing material in the Westway I building now, but it will be empty and available after the first of the year, he says. “We’re going to evaluate the market then. We may expand Westway I the same way, or do another spec building. We have to see what the market wants.”

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